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Jamie Dimon, the CEO of JPMorgan Chase, has made his contempt for cryptocurrency clear, calling it “nugatory” in the course of the nice crypto increase in October 2021. However now, he says, he has stopped even calling them “currencies.”
“Currencies have guidelines of regulation behind them, central banks and tax authorities,” Dimon stated in an interview with the Greek information outlet Ekathimerini. “I name them crypto-tokens.”
Strictly talking, Dimon is simply partly right. In financial idea, the sort of forex he means—backed by governments and their companies—is usually known as “fiat cash.” However earlier than there was fiat cash, there was forex as a broadly agreed medium of trade: Cowrie shells, as an example, have been as soon as used as forex so broadly throughout India, China, and Africa that the fashionable Ghanaian forex, the cedi, comes from the native phrase for “cowrie shell.”
Currencies don’t essentially must be backed by central banks to perform as a medium of trade; actually, the champions of crypto say that the worth of cryptocurrency lies exactly in that lack of centralized management.
How cryptocurrency fails as forex
The place Dimon has some extent, although, is within the different two capabilities of currencies: to facilitate trade for items and companies, and to retailer worth. Bitcoin could purchase you a espresso in El Salvador, and ethereum could purchase you an NFT itemizing on OpenSea, however such use circumstances are nonetheless uncommon. The principle factor crypto may be exchanged for is fiat forex.
And whereas cryptocurrencies do retailer worth, they do it much less reliably than the greenback or different fiat currencies. The value of bitcoin fell 46% between November 2021 and January 2022. If a fiat forex was ever that unstable, its customers could be in extreme bother.
To that finish, Dimon additionally claimed he didn’t perceive crypto belongings and prompt different folks don’t both: “You’ve seen that, within the final couple of months, they’ve misplaced half their worth within the US market,” he added.
When Dimon calls cryptocurrencies “tokens,” he’s casting them as particular sorts of tradable or fungible belongings with restricted utility. Crypto-enthusiasts consider tokens as a subset of all cryptocurrency. Dimon is telling them that cryptocurrency is already a lot narrower and extra restricted than they’d prefer to imagine.
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